The credit history (or credit report) is involved when buying on credit to get a loan when you need to rent an apartment, when you take a cell phone … It is the student that your bank will entitle you to a loan or not and under what conditions.
It depends on your use of credit and the management of your debts. To establish a credit history, it will therefore be necessary that you make use of credit. This is from your credit history that you will be assigned a credit score.
In a word, if you want to have a mortgage, it is not enough to have a good salary or a lot of money on his account. Owning a car purchased cash or pay rent will not be of any help either.
It works a bit like the good-points from your childhood or as bonus-malus insurance and is designed to assess your financial reliability and your ability to repay your debts.
The credit score is calculated based on the amount of credit payments, the ability to pay on time monthly payments, available credit (the ratio of credit used and credit allowed). Water bills, gas and electricity are seen as credits. Pay them on time improves the credit score.
The higher your score is, the higher the loan is advantageous.
Note: the average score in the U.S. is around 670 and the maximum score is 850.
It takes about 2 years to build up a credit history.
If no credit history prevents them from obtaining a loan, a bad score entitles him to a loan (or penalties will focus on the interest rate will be very high).
How to build a good credit score
1 – Obtain a credit card
2 – Pay as much as possible with this card.
3 – Pay your monthly payments on time and even with a few days in advance … you never know.
You can either pay the minimum required (minimum payment) or adjust all of your monthly expenses. Note that in the second case it is considered a loan but you do not pay interest.
While in the first case high interest will begin to accrue on the unpaid amount.
Under these conditions the choice is pretty quick if you know how to manage and you do not have to spend up to what you can afford.
4 – Wait for several months, and then do increase your credit limit (credit limit) even if you do not use it.
Remember that the higher your credit limit is high and your expenses are low, the better your score will be.
5 – After a year or a little more, ask your bank to have a normal credit card (credit card) and a card with no credit limit (secured credit card).